Major Gulf stock markets ended lower on Sunday as investors in the region reacted to comments by Federal Reserve Chair Jerome Powell signaling the U.S. economy would need tight monetary policy "for some time" to bring inflation under control.
Following in their global peers' footsteps, Gulf markets came under downward pressure as investors worried about a grimmer growth outlook amid a more hawkish policy stand from the U.S. Fed chief.
"His comments were more bullish than anticipated by investors and signaled that the central bank is not considering suspending the tightening cycle prematurely even with the decline in inflation in the U.S.," said Farah Mourad, Senior Market Analyst of XTB MENA.
"The central bank's tone could fuel risk aversion among international investors and push them away from other markets," Mourad added.
Saudi Arabia's benchmark index (.TASI) dropped 0.5%, mostly pressured by lenders as almost all fell into negative territory. Al Rajhi Bank (1120.SE) shed 1.4% and Saudi National Bank (1180.SE) sagged 1.3%.
Most Gulf Cooperation Council countries, including the kingdom, have their currencies pegged to the dollar and generally follow the Fed's policy moves, exposing the region to a direct impact from monetary tightening there.
The oil giant Saudi Aramco (2222.SE) retreated 1.7% as a slowdown in global growth may potentially cut oil demand.
Financial stocks also pulled the Qatar index (.QSI) 0.4% lower, with the Gulf's largest lender Qatar National Bank (QNBK.QA) dropping 1.4%.
Outside the Gulf, Egypt's blue-chip index (.EGX30) fell 1.1% as E-Finance for Digital and Financial Investments (EFIH.CA) sank 5.5% and Commercial International Bank (COMI.CA) lost 1.2%.
